Back to the complete issue
Monday, 16 April 2018

Central Bank could slash interest rates by another 100 bps despite upcoming subsidy cuts -Badr

Renaissance Capital MENA CEO Ahmed Badr believes Egypt’s central bank could slash interest rates by another 100 bps at its 17 May meeting despite expectations of inflation rising temporarily in July as the government further reduces energy subsidies.

Real estate stocks in favour? Interest rate cuts are shifting investor focus to real estate stocks, which Badr told Bloomberg TV is only natural. He warned, though, that Egypt’s real estate market is “overheated” and “fragmented … there’s too many developers now. That’s why I think consolidation in the market is something very important. We started seeing signs of it when Madinet Nasr Housing and Development might be considering a merger with SODIC.” Egypt stocks climbed the most in the Middle East last week on the back of cooling inflation levels cool, he noted .

On the regional equities fronts, strategic foreign investors have been moving to Egypt and Saudi Arabia and away from markets such as the UAE and Qatar on the back of their respective reform stories, says Badr. Saudi’s expected emerging market classification by the MSCI, which he calls a huge liquidity event, will continue to drive inflows there, especially as foreign ownership ratios there are small and have room to grow.

In terms of the regional bank space, Saudi is where you want to be, despite Qatar National Bank announcing that it can ride out the impacts of the blockade, Badr said. This primarily comes on the back of an expected emerging market classification by the MSCI and US interest rates moving up, he added. You can catch the full interview here (watch here, runtime: 5:45).

Badr’s remarks come as Renaissance Capital prepares to hold its third annual Egypt Investor Conference in Cape Town on 24-25 April. The event will see senior management from leading Egyptian companies meet one-on-one with South Africa-based investors.

Enterprise is a daily publication of Enterprise Ventures LLC, an Egyptian limited liability company (commercial register 83594), and a subsidiary of Inktank Communications. Summaries are intended for guidance only and are provided on an as-is basis; kindly refer to the source article in its original language prior to undertaking any action. Neither Enterprise Ventures nor its staff assume any responsibility or liability for the accuracy of the information contained in this publication, whether in the form of summaries or analysis. © 2022 Enterprise Ventures LLC.

Enterprise is available without charge thanks to the generous support of EFG Hermes (tax ID: 200-178-385), the leading financial services corporation in frontier emerging markets; SODIC (tax ID: 212-168-002), a leading Egyptian real estate developer; SomaBay (tax ID: 204-903-300), our Red Sea holiday partner; Infinity (tax ID: 474-939-359), the ultimate way to power cities, industries, and homes directly from nature right here in Egypt; CIRA (tax ID: 200-069-608), the leading providers of K-12 and higher level education in Egypt; Orascom Construction (tax ID: 229-988-806), the leading construction and engineering company building infrastructure in Egypt and abroad; Palm Hills Developments (tax ID: 432-737-014), a leading developer of commercial and residential properties; Etisalat Misr (tax ID: 235-071-579), the leading telecoms provider in Egypt; and Industrial Development Group (IDG) (tax ID:266-965-253), the leading builder of industrial parks in Egypt.